The move will help offset falling membership at the Lake Worth, Fla. property and result in the closing of one of its three golf courses. The buyer, GL Homes, could build as many as 470 housing units on the land it will acquire. As part of the terms of sale, the club must build a $2.5 million resort-style pool for its sports complex.
The Board of Directors of Fountains Country Club in Lake Worth, Fla., have struck a $17 million deal to sell golf course land to Sunrise, Fla.-based GL Homes, which would build up to 470 housing units on the property, The Palm Beach Post reported.
Right now, the Fountains community has three golf courses, but the board wants to close one of them, which it says will save $250,000 a year in costs, the Post reported.
The land sale to GL Homes is a way for Fountains CC to cope with declining membership during the past five years, the Post reported, according to a letter sent to club members by President Paul Napieralski.
It’s also a way to diversify the club and bring in amenities that homeowners now want, Napieralski added in an interview with the Post.
As part of the terms, the club must build a $2.5 million resort-style pool for its sports complex, the Post reported. The rest of the money likely will be used to pay off a Wells Fargo Bank loan and make other club improvements, Napieralski said.
The money will help “spruce up every aspect of our club, reinventing the Fountains as a premier country club in South Florida,” Napieralski told the Post.
Ricardo Catarino, Fountains CC’s General Manager, noted that membership clubs that are successful must now offer “an all-inclusive experience” that’s greater than just golf and tennis, the Post reported.
The proposed sale follows a January 2016 decision by a Palm Beach County Circuit Court judge that further hurt the club’s finances, the Post noted. In that decision, Judge Edward Artau ruled in favor of seven Fountains communities that wanted out of mandatory membership in the Fountains Country Club.
Although the club has appealed the ruling, the move “has resulted in lower revenues,” Napieralski wrote in his letter to members, the Post reported.
The Board is proposing to sell to GL Homes between 40 and 44 acres on the north golf course and next to the west course. The company would build about 150 to 200 single-family homes, ranging in price from $400,000 to $600,000, the Post reported.
On another part of the north course, GL Homes would build between 250 to 300 apartments on about 18 acres.
For GL Homes, the deal is an opportunity to build in the heart of Palm Beach County, the Post noted.
The Fountains is an enormous development dating back to the 1970s, the Post noted. It sits on 865 acres featuring 19 individual residential communities and 1,763 homes. Residences include single-family homes, villas, townhouses and condominiums.
The average price for all properties for sale now in the Fountains is $145,855, the Post reported, according to Ben Schachter, broker and principal of the Signature Real Estate Companies. During the past year, the average price of sold properties was $80,509, Schachter, who obtained the information from the Multiple Listing Service used by real estate agents, told the Post.
Larry Portnoy, a GL Homes Vice President, told the Post that the company became interested in Fountains because the location is ideal.
The deal will also be the first time GL Homes will build apartments, Portnoy added.
Up until now, the Post noted, GL Homes has built single-family homes throughout central and southern Palm Beach County in Florida, along with some commercial development. “If this works out, I would assume [apartment construction] would be something we would seek to do more of in the future,” Portnoy told the Post.
New development in an older community could make the Fountains fresh and appealing to home buyers, Schachter noted.
Napieralski said the land sale also would benefit the community because the new homes would pay into common area costs such as security, “so everybody will be paying a little less.”
But not everyone is in favor of the sale of club land. A community website called Fountainsresidentnetwork.com is filled with vigorous comments from residents who say the new GL Homes would take away views from existing homeowners, the Post reported.
Others just think it’s a short-term “money grab” that won’t fix the country club’s biggest issue — mandatory club membership.
Mandatory membership is the rule for 12 of the 19 community associations, the Post reported. This arrangement ensures a stready stream of cash flow to the club, proponents say.
For a time, membership in the Fountains Country Club was required for all 19 communities. But then seven associations wanted out, and litigation followed.
In a 2013 lawsuit, the communities said they were given the right to repeal mandatory membership when they agreed to it a decade earlier, in 2003. The country club filed a countersuit, arguing the associations had no right to repeal.
When Artau ruled in favor of the seven associations, the Fountains became a community divided, the Post reported.
For now, some 750 equity members in 12 associations bear the burden of the club’s upkeep. But according to the community website, more residents want out of mandatory membership.
At Fountains CC, equity club membership ranges from $3,000 to a maximum of $10,000, plus annual dues of about $10,000 for a couple, and other charges, Napieralski told the Post.
Those added expenses can figure into the price of a home and in turn depress home prices and limit the pool of interested buyers, the Post noted. At Fountains CC, “The homes have not appreciated nearly as well as other homes in the county that are non-club communities,” Schachter said.
As part of the deal with GL Homes, buyers of the new single-family homes only are required to become “sports members” of Fountains CC and pay about $200 a month in dues. But they do not have to join the golf club as equity members, the Post reported.
Apartment dwellers would not have access to any of the clubs, nor would they be required to join. But they could join if they wanted to, Napieralski said.
Napieralski wouldn’t comment on the issue of mandatory membership because of the ongoing litigation, the Post reported.
Club members still have to approve the deal with GL Homes by June 20 for it to go forward, the Post reported. If members give the OK, Portnoy said it would take about a year to get county approvals on the land, and then another year to build. New homes could be ready by 2018.
Jack McCabe, chief executive of Deerfield Beach, Fla.-based McCabe Research and Consulting, a real estate consulting firm told the Post that what’s happening at Fountains CC is a trend that will continue to affect other private golf course communities.
“As we continue our buildout of South Florida, with vacant land becoming unavailable, golf courses will be more desirable to developers,” McCabe said.